Homeowners advised to invest in elevation certificates

In the 2010 Flood Insurance Rate Map, the high to moderate risk areas are in maroon and red. The minimal risk areas are in yellow and in gray. These demarcations may change when the new map is released by FEMA. — Map courtesy of MVC

Martha’s Vineyard property owners who live near the coast could see their insurance rates rise or fall depending on the final version of a Federal Emergency Management Agency (FEMA) Flood Insurance Rate Map (FIRM) for Dukes county expected to be complete soon. One way homeowners can ensure that they receive the best and most accurate premium, experts told The Times, is to obtain what is known as an elevation certificate (EC).

While most communities on the Massachusetts shoreline have received their preliminary rate map, the FEMA website currently lists the Dukes County FIRM as “on hold.” This week, Kerry Bogdan, FEMA senior engineer, told The Times in an email, “While we are working hard to meet the projected schedule we last discussed, we are currently working to resolve an outstanding issue which could influence the projected timeline.”

Ms. Bogdan did not say what the outstanding issue is, but the delay presents an opportunity for Island homeowners to obtain an elevation certificate if they haven’t already done so.

FEMA and the National Flood Insurance Program (NFIP) do not require homeowners to purchase flood insurance. FEMA simply identifies the high risk zones and NFIP provides government subsidized insurance.

The only time a property owner has to purchase insurance is when he/she takes out a loan with a lender that is using federal money or is insuring his/her assets through a federal insurance program. That said, flood insurance can be a wise investment, even for people not in high-risk flood zones, experts advise.

Zone defense
Homeowners who want the best possible flood insurance rate are advised to invest in an EC. It verifies the elevation of a structure relative to the the base flood elevation. Base flood elevation for a home is where the high water mark of a flood that has a one percent chance of being equaled or exceeded, also known as a 100 year event, reaches the “first living level” of the home. The EC is required to properly rate post-FIRM buildings, which are buildings constructed or substantially improved after December 31, 1974, or after the publication of the first FIRM for that particular community.

If a property owner wants to contest FEMA’s FIRM zone designation when the new FIRM comes out, the EC is their best asset to do so, and it is required in a request for a Letter of Map Amendment (LOMA).

“A [LOMA] is an individual’s best way to fight a zone designation,” a staff member for Massachusetts 9th district congressman Bill Keating told The Times on background. “It’s not as difficult as it seems at first glance. We can get help from the right people at FEMA to help people through it. It’s not an inexpensive process, but it can save a lot of money in the long run, which is why it’s so important to get it right from the beginning.”

Preventing costly mistakes
An EC can also help property owners avoid construction or renovation decisions where a few feet, or in some cases, a few inches, can cost them dearly.

“I recently spoke with a woman who raised her house so it was in compliance with floodplain ordinances,” a flood insurance consultant who spoke to The Times on background to protect the privacy of clients said. “Unfortunately, she enclosed the elevated area and didn’t put flood vents in, so [the base flood elevation] was rated at minus three feet, which put her annual premiums at $4,400 or more. If she had had flood vents, she would have been rated at a plus five, which would have been roughly $480 per year.”

The consultant also spoke about a recent case where the owner of a newly constructed home didn’t properly complete work on the land surrounding his home. “He got a finished elevation certificate prior to laying the sod around his home. His floor was above base flood elevation, but his lowest adjacent grade — elevation of the lowest ground touching the structure’s foundation — was not above base flood elevation, by an inch. That inch will cost him thousands of dollars by keeping him in a flood zone.”

Big savings
According to floodsmart.gov, the National Flood Insurance Plan (NFIP) website, a homeowner with a house worth $250,000 can save more than $90,000 over 10 years by building three feet over base flood elevation.

Raising a structure is not the only way to achieve proper base flood elevation, according to the insurance consultant.

“If they’re in a hazard zone and they have a basement, filling in the basement, and creating a non-subterranean crawl space under the house with flood vents, can be very cost-effective,” he said. “Some people gasp at the idea, but if your basement floor is six feet below base flood elevation and your post-FIRM insurance costs are $4,000 per year, it can be a smart thing to do. It may cost you $15,000 to fill in the basement and move your utilities, but your insurance costs may be reduced by $3,600 per year. This return on investment would pay off in less than 5 years and you reduce the risk of enduring flood damage. It’s a win-win for homebuyer and seller.”

Changing a basement to a crawl space can also make that home more valuable and provide more equity that buyers may be able to qualify to purchase, since they won’t have to expend $150- $300 per month on flood insurance. The only way to know if changing the basement to a crawl space will yield savings is by having an EC completed and discussing the survey with a community code enforcement officer, the consultant said.

Although rising ocean levels and climate change lead many to assume that new FIRMs invariably raise insurances rates, in some cases, they can help lower insurance rates. “I just got off the phone with a gentleman from a Massachusetts shore area who’d had flood insurance for 40 years,” the consultant said. “He was rated in a V zone. When the new maps came out they designated him in a C zone. His insurance agent petitioned for refunds for this year and last year because the older maps didn’t have aerial photos which clearly identified where his building was in comparison to the flood plain. His premiums went from almost $3,000 to $450 dollars and he’s going to be grandfathered into the X zone rather than the V zone.  He’s very happy that the new maps came out.”

Preferred risk
Coastal areas vulnerable to flooding are numerous in Massachusetts and on Martha’s Vineyard. These areas are identified on the FIRM as a Special Flood Hazard Area (SFHA). SFHAs of high to moderate hazard begin with the letter A and the letter V. Moderate low risk zones are labeled either B, C or X. If a homeowner is not in a SFHA, he or she can qualify for a preferred risk policy extension (PRP), which has substantially lower rates than SFHA policies.

Owners in an X zone who think they could be reassigned into an A or V zone when the new FIRM comes out, should act quickly or risk not qualifying for the PRP. Once the new FIRM is released, it’s too late. There’s another wrinkle coming down the road, the “newly mapped property table” designation, which will go into effect on April 1, 2015.

If a homeowner takes out a PRP on December 1, 2014, and the maps change in July 2015, when they renew on December 1, 2015, they will qualify for the “newly mapped property table,” which for the first year will be a preferred rate. On December 1, 2016, the policy will be renewed by grandfathering or on base flood elevation, which means providing an elevation certificate.

“If you took the policy out before the maps changed and you were in a low hazard zone, then you’re going to be grandfathered in the lower risk zone, rather than the A or V zone. That could easily mean a price difference in premiums of $1,000 to $2,000,” he said.
EC’s do not have to be done repeatedly. If a homeowner gets an EC this year and it says that the lowest adjacent grade is one inch above the base flood elevation, they are not in the flood zone.

“If the maps change next year and the base flood elevation in your area goes up two feet, your elevation certificate is still good,” the consultant said. “However, you would be in a special flood hazard area.”

An EC must be filled out by a qualified engineer or surveyor. It can cost anywhere from $500 to over $1,500. “I always encourage neighbors to pool their resources. Surveyors base their measurements on the property benchmarks. Why not involve the neighbors who share those benchmarks and defray your cost?”

According to FEMA, every home is in a flood zone. It’s the potential for flooding that varies. A homeowner needn’t live on a shoreline to benefit from a preferred risk policy, or the investment in an EC.

“I recently had a situation where a large water main broke and flooded a number of houses,” the insurance expert said. “Fire and homeowners insurance doesn’t cover a situation like that. Only flood insurance covers foundation damage. Since their house is the most valuable asset for many people, it makes sense to get flood insurance. And an elevation certificate ensures they get the correct insurance.”

More information about elevation certificates and FIRMs can be found at FEMA’s recently launched Flood Map Service Center  website.